Anuj Puri, Chairman – ANAROCK Group:
There is little doubt that the RBI will further increase the repo rates in tomorrow’s announcement of the monetary policy review. What remains to be seen is the quantum of increase. The rate hike could be anywhere between 25-50 BPS. If the hike is above 50 BPS, it may impact homebuyer sentiments, and thus residential sales. It is now inevitable that home loan interest rates will finally depart from the ‘sweet spot’ territory that they have been occupying over the last 2 years, and enter into the yellow alert zone of lower overall affordability. That said, as long as they stay clear of the double-digit red zone that they saw during the global financial crisis in 2008, we expect housing demand to continue – albeit at a marginally lower pace. Even at the height of the global financial crisis, housing demand did not entirely evaporate. In India today, housing demand is driven by genuine end-user sentiment – the desire to own homes remains strong and will largely withstand marginal fluctuations in lending rates.
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